Table of Contents

• Introduction
• Key Benefits
• Getting Started
• Configure Charges for Unit-Based Prepayments
• Manage Prepaid Units
• FIFO Consumption Logic
• Transferring Units
• Revenue Recognition
• Usage Charges and Overages

Introduction

The Prepayment Wallet of Units feature allows you to treat prepayments as a collection of units rather than dollar amounts. Previously, prepayments were managed as a "wallet of dollars," which could lead to billing inaccuracies when prepayment prices differed from usage prices.

With the wallet of unit's model, the system tracks and consumes units based on their original purchase price using First-In, First-Out (FIFO) logic.

Wallet of Units also supports prepaid unit buckets with a unit price of $0.00, allowing organizations to track and consume prepaid units without assigning a monetary value to each unit.

When Fair Market Value (FMV) allocation is enabled, these buckets are also included in FMV allocation calculations.

Key Benefits

• Accurate Billing: Drawdown pricing uses the prepayment bucket price, not the usage charge price
• Precise Revenue Recognition: Revenue is recognized using the prepayment bucket price or the calculated Fair Market Value (FMV) per unit, depending on your configuration.
• Better Visibility: Track remaining units per bucket 
• Flexible Transfers: Transfer partial or full prepaid units between subscriptions
• FIFO Logic: Units are consumed in the order they were purchased
• $0 Unit Price Support: Configure prepaid unit buckets with a unit price of $0.00 for entitlement-based or bundled offerings. When FMV allocation is enabled, these buckets are also included in FMV allocation calculations.

Getting Started

Learn how to enable and configure Wallet of Units in your Ordway environment.

Enable Wallet of Units

Turn on the Wallet of Units feature in Company Settings to begin tracking prepayments as units.

To enable the feature:

1. In the left navigation pane, go to(Setup) > Settings. The Company Settings page is displayed
2. Under the Subscription section, toggle on Prepaid Units as Wallet of Units.
   
3. Click Save. A confirmation message appears: Settings updated successfully.

Configure Charges for Unit-Based Prepayments

Set up charges to use prepaid units instead of dollar amounts during plan or subscription creation.

When creating or editing a charge on while setting up plan:

1. In the Add/Edit Charge Modal; toggle on Enable Prepaid Units
2. Set Prepayment Type to Units.
3. Enter the quantity in the Prepaid Units field.
   
    
4. Click Save. You can also configure this while creating a subscription.
   
    
5. Once configured, all prepayments for this charge will be tracked as units rather than dollar amounts.

Manage Prepaid Units

Monitor and manage unit balances, track consumption, and add new buckets as needed.

Viewing Unit Balances

Access detailed breakdowns of invoiced, unused, and remaining units per bucket.

To view your prepayment unit balances:

1. Navigate to the Billing Schedule of the charge with prepaid units from the subscription page
2. Click Manage Prepaid Units in the three-dot menu on the top right.
   
3. View the detailed breakdown showing:
   • Total Invoiced Prepaid Units
   • Total Unused Prepaid Units
   • Purchase price per bucket
   • Balance Units per bucket
     
4. You can also add a new bucket by clicking on Add Prepaid Units.

Understanding Balance Tracking

Unit balances are tracked independently of dollar amounts. Each bucket retains its original price and supports fractional units.

• Balances are tracked in units, not dollars
• Each bucket maintains its original unit price
• After usage drawdown, balances update to reflect consumed units
• Fractional units (e.g., 100.5 units) are supported and follow FIFO logic

FIFO Consumption Logic

FIFO ensures that older units are consumed before newer ones, maintaining pricing integrity.

Example: Initial Purchase

• Bucket 1 Customer purchases 100 units at $1 per unit
• Bucket 2: Customer purchases 100 units at $2 per unit
• Usage Consumption: 150 Units
  • First 100 units are drawn from the Bucket 1 at $1/unit = $100
  • Next 50 units are drawn from the Bucket at $2/unit = $100
• Total billing: $200
  

Remaining Balance

• Bucket 1: 0 units remaining
• Bucket: 50 units remaining at $2/unit
  

Transferring Prepaid Units

Transfer prepaid units between subscriptions while maintaining traceability and billing accuracy.

To Transfer Units

1. Navigate to the Billing Schedule of the charge with prepaid units of the source subscription
2. Click Manage Prepaid Units in the ellipsis menu on the top right.
   
3. Click on the three-dots menu of the bucket from which you want to transfer and click Transfer.
   
4. Select the destination subscription and charge.
5. Enter the quantity to transfer in the Units to Transfer field (default: all available units)
6. Click Transfer.

After Transfer

• Source: Unit deducted 
• Destination
  • “Transferred From” column appears.
  • Tooltip shows origin subscription and charge. 
  • Billing remains on the source subscription.

Revenue Recognition

Revenue recognition depends on whether Fair Market Value (FMV) allocation is enabled.

• When FMV allocation is disabled, revenue is recognized using the prepayment bucket price.
• When FMV allocation is enabled, revenue is recognized using the calculated FMV per unit.

When FMV allocation is disabled

When FMV allocation is enabled

Example: Revenue Recognition without FMV Allocation

If a customer consumes 150 units:

• 100 units from Bucket 1 at $1/unit = $100 revenue
• 50 units from Bucket 2 at $2/unit = $100 revenue
• Total Revenue Recognized: $200

Usage Charges and Overages

Prepaid units are consumed at the bucket price. Once exhausted, overages are billed at the usage charge price.

• Prepayment consumption: Uses the prepayment bucket price
• Overages: Use the usage charge price (only after all prepaid units are exhausted).

Example

Setup

• Prepaid: 200 units at $1/unit
• Usage charge price: $1.5/unit

Consumption

• Customer uses 250 units total
• First 200 units: Drawn from prepayment at $1/unit = $200
• Remaining 50 units: Billed as overage at $1.5/unit = $75
• Total Billing: $275